Oil stays near $90 a barrel on Iran talk
Oil prices gained overnight and were slightly higher Friday, as the U.S. government lobbied international powers not to back down on OPEC`s second-largest producer, Iran, over its nuclear program.
U.S. Secretary of State Condoleezza Rice urged Europe and Russia on Thursday to ratchet up pressure on Iran to halt uranium enrichment and come clean about its nuclear programs.
Rice`s talks with European and Russian officials showed Washington remains committed to isolating Iran, despite a new U.S. intelligence estimate that contradicted years of assertions that Iran is secretly pursuing atomic weapons.
Light, sweet crude for January delivery rose 26 cents to $90.49 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. The contract rose $2.74 to settle at $90.23 a barrel Thursday.
In London, January Brent crude rose 4 cents to $90.22 a barrel on the ICE Futures exchange.
An explosion Friday under a key oil pipeline in northern Iraq - although oil continued to flow through the damaged pipe - also helped push prices higher.
Iraqi police said the blast set off by insurgents occurred near Beji, north of Baghdad, which houses northern Iraq`s largest oil refinery and serves as a key transfer point for crude oil being exported out of Iraq.
Some analysts saw the gains as a delayed reaction to news from Wednesday, including OPEC`s announcement that it would hold production steady rather than increase output and a government report that showed domestic crude inventories dropped sharply last week.
Thursday`s price jump also reinforced a view that last week`s steep drop in crude prices was just a minor setback on the road to $100 oil. Crude futures opened last week above $99 a barrel, but closed below $88 a barrel Wednesday.
Olivier Jakob of Petromatrix in Switzerland saw "strong support" for prices to stay above $85 per barrel and would need breaking news or damaging statistics to break it, "as bottom picking is materializing after the sharp flat price drop of the last 10 days."
The Bush administration`s announcement Thursday of a five-year freeze in loan rates for homeowners affected by the subprime U.S. mortgage crisis also was seen as feeding the rally.
"Our interpretation is that traders saw the relief plan as an indication that any recession might be averted or moderated," said Peter Beutel, president of the U.S. energy risk management firm Cameron Hanover.
Also supporting oil prices Thursday was the Organization for Economic Cooperation and Development`s revision of its forecast for China`s economic growth this year to 11.4 percent from an earlier estimate of 10.4 percent. Oil prices have risen steadily since 2003 in part because of growing demand from China and India.
Heating oil futures rose 0.6 cent to $2.5456 a gallon (3.8 liters), while gasoline prices added 0.37 cent to $2.3050 a gallon. Natural gas futures were up 2.8 cents to $7.358 per 1,000 cubic feet.
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